Energy bills: 30-day notice plan for price rises

Image caption Various changes to consumers' bills have been introduced by Ofgem

Customers could be told in advance about energy price rises rather than notification up to two months after the event.

Current rules mean suppliers can wait for 65 working days after prices have been put up to tell their customers.

But under plans published by regulator Ofgem, companies would have to give customers 30 calendar days' warning before putting prices up.

It said the timescale would allow people to shop around for deals.

If the proposals are accepted by the energy companies, they could come into effect by January 2011.


An Ofgem inquiry into the domestic energy market found that the 65-day statutory deadline was supposed to be a backstop.

After notice was given, customers had 20 days to switch supplier if they wanted to avoid paying the increased price. Under the new plans, they could now do this before the rise came into effect.

"A month's notice of price increases, along with annual energy statements and better information on bills, will empower consumers by giving them the facts about how much their energy costs," said Andrew Wright, Ofgem's senior partner for markets.

"This information makes it easier to shop around for a better energy deal and to evaluate the benefits energy efficiency measures can deliver.

"We will continue to keep the effectiveness of the energy market under review and will not hesitate to bring forward further measures to protect consumers if the evidence shows them to be necessary."

The Liberal Democrats first raised the issue of the 65-day rule in January, and the Labour government then vowed to reduce the delay to 10 days.

The coalition government has since said it will change the rules, with the issue raised again at the Liberal Democrat conference last week.

Now Ofgem has gone further by proposing that consumers are told of price rises in advance.


Industry watchdog Consumer Focus welcomed the plans.

"If people's energy bills are going to go up, of course they [customers] should be told in advance, not up to two months later," said Audrey Gallacher, the watchdog's head of energy policy.

"By knowing about price rises, people can budget for them and look to switch to a cheaper deal. The next step is for Ofgem to tackle the confusing array of energy tariffs consumers have to battle with. It should also address problems with rollover contracts, where people can be unwittingly tied into long deals with expensive get out clauses."

But others called on Ofgem to go further, to ease the burden on call centres.

"Notice periods of up to 65 days would give time for information to be spread through normal billing cycles," said John McShane, of analysts Saturn Energy.

"We know that from the perspective of suppliers, there are concerns that a mass mailing around a price increase at 30 days' notice would lead to overloading customer service lines and encourage many customers to change suppliers."

Energy UK, which represents the major suppliers, said it would work with Ofgem on the proposals.

"The industry looks forward to seeing Ofgem's proposal in detail and will consider carefully the likely impact on customers. Energy companies are constantly working to improve customer service and satisfaction in a wide range of ways," said director Christine McGourty.

"At the moment, customers are often informed of any price change well within the 65-day period. And it is important to note that customers do already have an additional 20 working days in which they can choose to reject a price increase, without paying any backdated costs."

Other changes to bills made recently by Ofgem included the introduction of annual energy statements, allowing people to compare tariffs more confidently, and stricter rules on doorstep sales.

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